How to insure EV? Risk pricing under study

The local nonlife insurance sector aims to come up with industry-accepted guide rates for electric vehicles (EV) this year, with higher premiums likely awaiting drivers due to high costs of repairing and servicing such cars.

Michael Rellosa, executive director of Philippine Insurers and Reinsurers Association (PIRA), the umbrella organization of nonlife insurers in the country, said the industry was hoping to finish crafting the guide rates before mid-year.

To do that, Rellosa said local insurance providers were looking at other nations’ experience in insuring EVs to help with pricing and risk assessments.

READ: Five facts about electric vehicles in 2024

“We have asked for assistance from countries that have already covered electric vehicles like Malaysia [and] Thailand. But of course, we can’t rely on their statistics because their data is different from ours,” Rellosa told reporters.

This year, the Chamber of Automotive Manufacturers of the Philippines, Inc. is projecting the growth in purchases of EVs to “grow easily” by 10 percent.

But local EV owners are seen to find themselves paying more for insurance, in line with the trend in other countries where high premiums dampen demand for more environmentally friendly cars.

In a separate interview, Alexander Reyes, member of the motor committee at PIRA, said some insurance firms might charge EV drivers twice as much as the premium for fuel-powered automobiles due to high-risk factors typically associated with repairing and servicing electric cars.

For one, Reyes said a damaged battery could already account for almost half the value of an EV, and some owners might find it more practical to buy a new vehicle instead.

Also, EV batteries are typically placed under the vehicle, making it risky to drive in flood-prone areas in the Philippines, which is visited by numerous typhoons annually.

That said, Reyes explained that apart from more expensive premiums, insurers might also have to resort to “stricter” terms.

“There are some insurers who offer EV now. Maybe not actively; they’re probably forced to. Or those who have deals with banks, they have no choice,” he said.

“Some companies actually opted not to insure electric vehicles first because they heard that the losses are bad in other markets. But some companies are trying, maybe trying with a few accounts,” he added.